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Isis Pharmaceuticals, Inc. (ISIS - Analyst Report) recently announced that it has invested $3 million in biopharma company Regulus Therapeutics Inc.’s (RGLS - Snapshot Report) common stock at the latter’s initial public offering. Isis Pharma currently holds approximately 18% (7 million shares) of Regulus’ common stock on a fully diluted basis.

Regulus, founded by Alnylam Pharmaceuticals (ALNY - Analyst Report) and Isis Pharma, announced the pricing of its initial public offering earlier this month. Regulus offered 11.25 million shares of its common stock at $4.00 per share. Regulus started trading on NASDAQ from October 4, 2012.

We note that apart from Isis Pharma, AstraZeneca (AZN - Analyst Report) has purchased 6.25 million shares of Regulus at the initial public offer price. In August 2012, Regulus had filed a registration statement with the US Securities and Exchange Commission (SEC) regarding the initial public offering of its shares.

In the filing, Regulus indicated that Sanofi (SNY - Analyst Report) and GlaxoSmithKline (GSK - Analyst Report) have shown an interest in buying Regulus’s common stock, worth up to $10 million and $2 million, respectively, at the initial public offering price.

In September 2007, Alnylam and Isis Pharma joined forces to establish Regulus, a company focused on microRNA (mRNA) therapeutics. In October 2010, Sanofi made an equity investment in the company. As of June 30, 2012, Regulus was jointly owned by Alnylam (45%), Isis Pharma (46%) and Sanofi (9%).

Regulus is evaluating microRNA therapeutics in several areas including oncology, fibrosis, hepatitis C virus infection, multiple sclerosis and atherosclerosis. The company has collaborated with several companies including Glaxo, Sanofi, AstraZeneca and Biogen Idec (BIIB - Analyst Report) for microRNA therapeutics.

Our Recommendation

Currently, we have a Neutral recommendation on both Isis Pharma and Alnylam. Both companies carry a short-term Zacks #3 Rank (Hold rating).

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